Changing the world for the better is something all the good startups want to do, but those doing it as a business still need to turn a profit – Berlin-based online marketplace for solar energy projects Milk the Sun is confident they’ll nail it.
If following a passion for music and entertainment can be a deadly path for startup founders, then the renewable energy sector is even more fraught. There’s often hardware involved (harder to crack than an iPhone app), governments keep changing the rules, old-school VCs are leery of “green” businesses that don’t put profits first and – most difficult – what people support and what they’re willing to do are often different things:
“We’re realistic greenies,” Milk the Sun co-founder (and ocean-loving surfer) Felix Krause says. “There’s a certain standard of living and people won’t go away from that. If people provide them with ways of keeping the standard of living as high with renewable energy, people will change.”
Milk the Sun, run by a nine-person team in Berlin, is a platform to connect people with solar panels, or space to install them, with investors. “People who believe housing is a bubble, or that other investments aren’t secure…”
The inspiration for the business came from Krause and co-founder Dirk Petschick’s past lives as developers of solar projects for investors:
We constantly faced problems with agents trying to make money on the side. We wondered if there was anything like [German real estate portal] ImmobilienScout for the solar industry – and there wasn’t.”
Since starting trading in June, Milk the Sun has made 16 trades – worth about 10MW base load of electricity, or enough to power about 3,000 average households or cover 10 football fields with solar panels. Kraus says another 25MW is currently in due diligence. “We’re pretty sure each month we’ll see larger trades.”
Milk the Sun users make trades all around Europe, from Germany to the UK, Italy and Belarus. The rules and returns are different in each country but, in Germany, solar projects generate returns comparable to housing investments (excluding speculation), Krause says.
Rather than make risky assumptions about the future, Milk the Sun is matching their business plan to what already exists – 1.9 million different solar installations already in place in Europe. Even if just 1.5 per cent of those projects are traded, it’d mean about €2 billion changing hands. “That’s enough to feed a company like Milk the Sun and a few others even without any new installations,” Krause says. (Milk the Sun’s fee works out to be about 0.5 per cent of the value of each deal).
Of course, he’s guessing there’ll eventually be much more to play with: “Even though we might see a bit of a downturn now, renewable energy will be the future.”